Shipping News: FedEx Making Cuts, EU to Review UPS Bid

FedEx (NYSE:FDX) Chief Executive Fred Smith has announced his company’s plan to cut expenses at its FedEx Express segment, a move that he hopes will ultimately increase profitability.

Smith explained to investors that FedEx – which lowered its projections on 2013 profits last month – would be better served in the long run by making the necessary cuts now. He anticipates the effects of the move to really be felt in 2015 and 2016, by the end of which he estimates profits will have improved by $1.7 billion.

Meanwhile, FedEx’s biggest competitor United Parcel Service (NYSE:UPS) – the largest delivery service company in the world – is anticipating a blow next week from the European Union’s anti-trust commission.

A source close to the issue reports that EU regulators are reviewing UPS’s proposed buyout of TNT Express (AMS:TNTE) and are likely to deem it anti-competitive. The EU commission is expected to list its concerns about the $6.6 billion deal in a meeting with UPS before filing an official statement of objections.

Analysts believe if UPS wants the deal to be approved – the largest in company history – it must be prepared to offer a number of concessions to ease the EU’s anxieties about the merger, although its unclear what sort of concessions the company is in a position to make.